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Albemarle & Mineral Resources Ink Deal to Form Lithium JV

Albemarle Corporation ALB recently inked an Asset Sale and Share Subscription Agreement with Mineral Resources Limited. The deal enables Albemarle to acquire 50% interest in Mineral Resources' Wodgina hard rock lithium project in Australia through a fully-owned subsidiary.

Albemarle will form a joint venture (JV) with Mineral Resources to own and operate the project as well as produce spodumene concentrate and battery grade lithium hydroxide.  

Post deal closure, Albemarle will acquire 50% interest in all mineral rights within the Wodgina tenements, excluding iron ore (to be retained exclusively by Mineral Resources) and tantalum (held by a third-party), the spodumene concentration facility and other fixed infrastructure and mobile mining equipment as well as utility assets to be used in the project barring the crusher (owned and operated by Mineral Resources) for a purchase price of $1.15 billion.  

Notably, the Wodgina project is projected to produce around 100 ktpa lithium carbonate equivalent (LCE) following the acquisition and completion of the construction and ramp up of the spodumene concentration plant. It will be used as feedstock for the future lithium hydroxide plant. The companies will jointly design, build, fund and operate a battery grade lithium hydroxide plant, which will be constructed at Wodgina in two stages of up to 50 ktpa LCE each. The facility will utilize Albemarle's core design.

Further, the deal has been approved by the board of directors of the companies. It is expected to close in the second half of 2019, subject to necessary antitrust and regulatory approvals along with satisfaction of other customary closing conditions.
Shares of Albemarle have lost 11.9% in the past six months compared with the industry’s 20.3% decline.

Zacks Rank & Other Stocks to Consider

Albemarle currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the basic materials space are CF Industries Holdings, Inc CF, sporting a Zacks Rank #1 (Strong Buy) along with The Mosaic Company MOS and Cameco Corporation CCJ, carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

CF Industries has an expected earnings growth rate of 748% for the current year. The company’s shares have inched up 1.1% in the past year.

Mosaic has an expected earnings growth rate of 75.2% for the current year. The company’s shares have rallied 22.7% in the past year.

Cameco has an expected earnings growth rate of 66.7% for the current year. Its shares have gained 10% in a year’s time.

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